Chapter 10

Customer
relationship
management

The Nature of Distribution

Channels
B&S

RM

CIMS

CRM

e-CRM

Time
line
Late
80s

Early
90s

Mid 90s

2002 Future

B&S Buying & Selling

RM Relationship Marketing
CIMS Customer Information Management Systems
CRM Customer Relationship Management
e-CRM- A subset of CRM that focuses on enabling customer
interactions via e-channels (The web, email and wireless)

Definition:

is a business strategy with outcomes

that optimise profitability, revenue and
customer satisfaction
by organizing around customer segments,
fostering customer-satisfying behaviors and
implementing customer-centric processes.

is a strategy
used to learn more about customers' needs
and behaviors
in order to develop stronger relationships w
them.

Underpinning Theory:

Customers have many points of contact with an

organisation
Retaining customers is far most cost effective
than recruiting new ones
Some customers are more profitable than others

The 80/20 rule

For most firms, 80% of profit comes from 20% of custom

Use of Technology

Potential Benefits Of CRM:

Identifying needs & increased sales
through better timing due to anticipating
needs based on historic trends
cross-selling/ up-selling of other products
by highlighting and suggesting alternatives
or enhancements
identifying which of your customers are
profitable and which are not
Customer Retention

Benefits Of CRM For Customers:

Continuity
A contact point
Personalisation

Potential Costs Of CRM:

Costs of IT infrastructure
Insufficient resources maintenance
Complex System Employee Training
Poor communication can prevent buy-in

Three phases of CRM:

Acquiring New Relationships
You acquire new customers by promoting your
companys product and service leadership.
Enhancing Existing Relationships
You enhance the relationship by encouraging
excellence in cross-selling and up-selling,
thereby deepening and broadening the
relationship.
Retaining Customer Relationships
Retention focuses on service adaptability
delivering not what the market wants but what
customers want.

Steps to improve CRM:

1.

Build a database

2.

Analyse, define types, profitability

3.

Customer selection

4.

Activities to delight selected customers

- discourage others

5.

Analyse again to see how were doing

What should be in the database:

Demographics
How do you get people to provide this?
History of contacts
Transaction history or summary
Response to marketing communications
How did you hear about us (this offer?)

Behavioral Patterns:
Customer lifetime value
On-line analytical processing (OLAP)
Behavioral patterns
Consumption channel
Benefit segments
Degree of loyalty